Lawsuit Filed Against Binance and CEO for Tweets That Allegedly Led to Competitor's Collapse
Date: 2023-10-03 Author: Dima Zakharov Categories: IN WORLD
Binance Faces Lawsuit Over Alleged Damage to Competitor FTX
In a Northern California district court, a collective lawsuit has been filed against Binance.US and Binance CEO Changpeng Zhao, accusing them of various violations of federal and California antitrust laws for attempting to monopolize the cryptocurrency market by causing harm to their competitor, FTX. The lawsuit has been brought by Nir Lahav, identified as a California resident.
The Tweets That Sparked the Lawsuit
The lawsuit centers around tweets made by Zhao on Twitter (X) in early November, just before the collapse of FTX. These tweets were related to the decision by the defendants to liquidate their assets in FTT tokens on November 6. According to the plaintiffs' estimates, Binance owned up to 5% of all FTT tokens. The following day, Zhao announced in a tweet that Binance had signed a letter of intent to acquire FTX but later backed out of the deal.
The lawsuit alleges that Zhao publicly disseminated this information [about the withdrawal of the acquisition offer] on Twitter and other social media to harm FTX companies, ultimately leading to the rapid and unprecedented collapse of FTX.
The Legal Arguments
The plaintiff began his argument by citing the policies of the U.S. Securities and Exchange Commission (SEC) regarding cryptocurrencies and referred to decisions by the Supreme Court of Howey and Reeves.
Furthermore, he claimed that Zhao's tweet on November 6, stating, "In light of recent revelations that have come to light, we have decided to liquidate all remaining FTT on our accounts," was false and misleading because Binance had already sold its assets in FTT Holdings, and this post was "intended to cause a drop in the price of FTT in the market."
A Statement with Consequences
The lawsuit points to Zhao's last sentence in the tweet, where he wrote, "We have nothing against anyone. [...] But we won't support people lobbying against other industry players." The plaintiffs interpreted this last statement as an indication that Binance was against the efforts of FTX CEO Sam Bankman-Fried.
The lawsuit claims that Zhao's acquisition proposal for FTX was made in bad faith and that this episode "ultimately will result" in FTX's collapse.
Seeking Monetary Damages
The lawsuit against Binance seeks to recover monetary damages, legal costs, and profits obtained unlawfully under seven counts of allegations. It's worth noting that the trial against Bankman-Fried is set to begin today.
In a Northern California district court, a collective lawsuit has been filed against Binance.US and Binance CEO Changpeng Zhao, accusing them of various violations of federal and California antitrust laws for attempting to monopolize the cryptocurrency market by causing harm to their competitor, FTX. The lawsuit has been brought by Nir Lahav, identified as a California resident.
The Tweets That Sparked the Lawsuit
The lawsuit centers around tweets made by Zhao on Twitter (X) in early November, just before the collapse of FTX. These tweets were related to the decision by the defendants to liquidate their assets in FTT tokens on November 6. According to the plaintiffs' estimates, Binance owned up to 5% of all FTT tokens. The following day, Zhao announced in a tweet that Binance had signed a letter of intent to acquire FTX but later backed out of the deal.
The lawsuit alleges that Zhao publicly disseminated this information [about the withdrawal of the acquisition offer] on Twitter and other social media to harm FTX companies, ultimately leading to the rapid and unprecedented collapse of FTX.
The Legal Arguments
The plaintiff began his argument by citing the policies of the U.S. Securities and Exchange Commission (SEC) regarding cryptocurrencies and referred to decisions by the Supreme Court of Howey and Reeves.
Furthermore, he claimed that Zhao's tweet on November 6, stating, "In light of recent revelations that have come to light, we have decided to liquidate all remaining FTT on our accounts," was false and misleading because Binance had already sold its assets in FTT Holdings, and this post was "intended to cause a drop in the price of FTT in the market."
A Statement with Consequences
The lawsuit points to Zhao's last sentence in the tweet, where he wrote, "We have nothing against anyone. [...] But we won't support people lobbying against other industry players." The plaintiffs interpreted this last statement as an indication that Binance was against the efforts of FTX CEO Sam Bankman-Fried.
The lawsuit claims that Zhao's acquisition proposal for FTX was made in bad faith and that this episode "ultimately will result" in FTX's collapse.
Seeking Monetary Damages
The lawsuit against Binance seeks to recover monetary damages, legal costs, and profits obtained unlawfully under seven counts of allegations. It's worth noting that the trial against Bankman-Fried is set to begin today.
